Fact
Sheet #23 - Fuel Cost Adjustment
(Questions and Answers for Owners)
What
is a Fuel Cost Adjustment?
New
York City Local Law 20 of 1980 amended the New York City Rent Control Law
to permit rent adjustments based on the changes, up or down, in the prices
of heating fuels. Beginning in 1981, and for subsequent years, the rent
adjustment is based on fuel price changes between the beginning and end
of the prior year.
Who
is covered by the Fuel Cost Adjustment law?
Only
owners and tenants of rent controlled apartments located in New York City
are covered by this law.
What
are the Fuel Cost Adjustment filing requirements?
Building
owners must certify that they are maintaining essential services and that
it has been at least 12 months prior to filing that DHCR ordered a rent
restoration for any reduction in rent for failure to provide heat and hot
water or other essential services. Buildings that have not qualified for
Maximum Base Rent increases may be eligible for fuel cost adjustments.
To
obtain the adjustment, the owner must complete, certify and serve upon
each eligible tenant, a copy of DHCR's Owner's Report, Certification,
and Notice of Fuel Cost Adjustment Eligibility (DHCR Form RA-33.10).
The owner must file with DHCR a master copy of the Report, together with
Schedule A or B where applicable, and a schedule of monthly rent increases
for all the rent controlled tenants who were served with copies of the
Report. The rent adjustment is collectible when the tenant and DHCR are
served with the completed Report forms and schedules. No order from the
Rent Administrator is required.
May
the owner collect the Fuel Cost Adjustment from a tenant whose Maximum
Collectible Rent (MCR) equals or exceeds the Maximum Base Rent (MBR)
for the apartment?
Yes,
however, the owner must certify that the property will not be yielding
an 8 1/2% return on the equalized assessed value after receiving rent increases
for the fuel cost adjustment.
How
is the Fuel Cost Adjustment computed?
The
quantity of fuel delivered during the previous year is divided by the number
of rooms in the building, not to exceed the annual maximum consumption
standard per room for the type of fuel used. This figure is then multiplied
by the price change, divided by 12 months and multiplied by 75%. Seventy-five
percent (75%) of the annual fuel cost per room is passed along to the tenant.
May
an owner who failed to file for Fuel Cost Adjustments for past years,
file for future adjustments?
Yes,
an owner may file for future fuel cost adjustments; however, the past fuel
cost adjustments are forfeited.
May
an owner who failed to file in 1989 for a Fuel Cost Adjustment, file
in 1990 for the 1989 adjustment?
No.
To get a rent increase based upon price changes that occurred in 1988,
the owner had to file in 1989. If the owner did not file in 1989, the fuel
cost adjustment for 1989 is forfeited.
Do
Fuel Cost Adjustments granted in 1989 terminate at the end of 1989?
No.
These increases continue to be collectible, unless modified or revoked
by order of the Rent Administrator. Any fuel cost adjustment for 1989 must
be added to or subtracted from the 1980 through 1988 adjustments, known
as the cumulative fuel cost adjustment.
Is
the Fuel Cost Adjustment retroactive?
Fuel
cost adjustments are retroactive to January 1st of each year provided the
owner files the Report within 60 days after the fuel consumption and price
change standards are released. For reports filed with DHCR after the 60
day period, the increase is prospective. Where an owner has obtained one
or more fuel cost increases previously and the cost of fuel decreases in
a subsequent year, the owner must file a timely Report and decrease the
tenant's fuel cost adjustment or the entire fuel cost adjustment will be
suspended for that 12 month period.
Is
there a penalty if an owner does not file a Fuel Cost Adjustment Report
when the cost of fuel decreases?
Yes.
When the cost of fuel decreases, the owner must file a timely Report and
pass the decrease on to the tenants. Failure to serve the tenants and DHCR
within 60 days after the fuel consumption and price change standards are
released will result in the suspension and revocation of all previous fuel
increases for a period of 12 months.
Is
the Fuel Cost Adjustment incorporated in the rent for an apartment?
No.
The law states that the fuel cost adjustment is not to be incorporated
in the rent on which Maximum Base Rent increases are computed.
Can
the Report be challenged if a tenant has reason to believe that the Report
is not accurate?
Yes,
a tenant has the right to challenge, based on any known error, omission,
or misrepresentation on the Report or any attachments. The tenant should
first contact the owner and attempt to resolve the disagreement. If differences
remain, the tenant has 33 days after receipt of the Report to file the Tenant's
Challenge to Landlord's Report and Certfication of Fuel Cost Adjustment
and Eligibility (DHCR Form RAC-2202.13).
What
is the penalty if DHCR finds that an owner falsified a Fuel Cost Adjustment
Report?
The
law prescribes the following penalty for false certification: a refund
of fuel cost increases collected in 2 prior years, plus ineligibility for
future cost adjustments for 2 succeeding years from the date of the determination
that a false certification was made. Other penalties and sanctions of the
law may also be imposed.
For
more information or assistance, call the DHCR Rent InfoLine (718-739-6400)
or visit your Borough or County Rent Office.
DHCR
Version 6/18/07
RGB page updated 8/8/08
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